With Tax Cuts on the Line, Flake Suddenly Decides to Trust Trump

A handful of Republican holdouts have flipped on tax reform, including the guy who blasted Trump’s “flagrant disregard for the truth.”

mitch-mcconnell-tax-bill

Congrats, big guy. You did it.

By Melina Mara/The Washington Post/Getty Images.

“We have the votes,” Senate Majority Leader Mitch McConnell triumphantly told reporters on Friday, referring to the G.O.P.’s much-belabored tax bill when, after publicly waffling for days, Senators Jeff Flake and Susan Collins, along with Ron Johnson and Steve Daines, finally got behind the prospect of screwing over the middle class to cut taxes on corporations and the wealthy. But as has become increasingly clear, the fact that Republicans have the votes to pass a tax bill does not mean that said tax bill, which will affect millions of people, not to mention almost every aspect of public life, is finished. Instead, the majority of lawmakers have decided to pass the bill first and find out what’s in it second. As of Friday afternoon, with a vote on the horizon, the bill had yet to be completed and continues to change as Republicans throw in cherry-picked clauses to win over holdouts and appease lobbyist groups.

Flake, who has heretofore professed to be a deficit hawk, explained his about-face on Twitter, noting that his colleagues secured his vote by promising to eliminate, from a $1.5 trillion bill, an $85 billion “budget gimmick” that allowed companies to immediately deduct new investment expenses. Oh, and he got leadership to agree to “include him in [their] talks” re: legislating a fix for DACA, under which nearly a million immigrants lived and worked legally in the United States.

“There are no iron-clad commitments . . . but I am confident,” Flake toldThe New York Times. “I’ve always been convinced on DACA that the president’s instincts are better than the advice he’s getting.” As a reminder, Flake literally wrote an entire book—and delivered a blistering speech—about how you can’t trust anything that Donald Trump says, referencing Trump’s “flagrant disregard for truth or decency.”

Senators Johnson and Daines flipped after McConnell said he would include a larger tax break for pass-through companies like the Trump Organization and the Johnson family business; whereas the original bill allowed owners of these businesses to deduct 17.4 percent from their business income, the new version increases the deduction to 23 percent. As Bloomberg notes, “it wasn’t clear Friday morning how Senate tax writers would offset the cost of a more generous deduction.” And Collins, who had previously opposed any bill that nixed Obamacare’s individual mandate or eliminated the estate tax, announcedon Friday afternoon that she would now support a bill that does both. The Senator from Maine, who also said not too long ago that she was concerned about the call to scrap state and local deductions, came around after McConnell generously added a $10,000 property tax deduction to the plan and promised that he’ll totally, definitely support funding for Obamacare.

Meanwhile, Democratic Senator Claire McCaskill tweeted just before noon that she and other Democrats were sent a list of new amendments to be included in the bill, not from Republicans but from lobbyists:

Around the same time, private equity firms learned that in addition to getting to keep the carried interest loophole Donald Trump vowed on the campaign trail to get rid of, they’d also get a sweet 23-percent deduction on management fees.

And, of course, all of these yes votes are coming without a score from the Congressional Budget Office, though that’s pretty much beside the point given that Republicans have now adopted a policy of simply refusing to believe any analysis that tells them their tax bill, whatever it turns out to be, won’t work.

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Republicans: You know we’re gonna have to gut the social safety net to pay for this tax plan, right?

The fact that Republicans are poised to pass a tax “reform” plan expected to put a trillion-dollar hole in the deficit is very upsetting to Senate Finance Committee Chairman Orrin Hatch, who has never once considered not voting for the bill. But he’s not upset at his colleagues—he’s mad at the lazy takers in this country who rely on things like Medicare, Social Security, and welfare.

Hatch’s grumbling, said Senator Ron Wyden, is a sign of things to come: “[It’s] all too predictable: The deficit hawks will come flying back after this bill becomes law. Republicans are already saying ‘entitlement reform’ and ‘welfare reform’ are next up on the docket. But nobody should be fooled—that’s just code for attacks on Medicaid, on Medicare, on Social Security, on anti-hunger programs.”

Mnuchin should probably just pack it in

Yesterday, we learned that despite Steve Mnuchin’s repeated assurances that the Treasury Department would release a detailed analysis of the Republican tax plan, such an analysis does not, in fact, exist. It’s unclear whether that’s because Mnuchin knows that any report will contradict his claim that the tax bill will “pay for itself,” or because he’s been too busy posing with money, but either way his lapse is now being investigated by the Treasury’s inspector general. In the meantime, in place of the promised analysis, Treasury officials pointed to a letter sent to their boss by nine top conservative economists saying the plan will definitely unleash the kind of growth Mnuchin has described.

Unfortunately for the ex-Goldman Sachs partner, on Friday Bloomberg reported that said economists dialed back their assessment and are now claiming that their estimates weren’t meant to be taken to heart:

The nine conservative economists, in a letter Thursday to two Harvard economists who challenged the finding, said their estimate wasn’t intended to include a time frame for when such growth would occur.

Oh, well!

Mike Flynn

Also on Friday, former Trump national security adviser Mike Flynnpleaded guilty to “willfully and knowingly” making “materially false, fictitious, and fraudulent statements” to the F.B.I. during an interview concerning his conversations with Russian Ambassador Sergey Kislyak. But the bigger news, if your name starts with a “D” and ends with an “onald Trump,” is that Flynn has agreed to cooperate with special prosecutor Robert Mueller, saying in a statement that doing so is “in the best interests of my family and of our country.” Team Trump, whose leader insisted in February that Flynn didn’t do anything wrong, immediately activated its blame Obama button, describing Flynn as a “former Obama administration official,” and claiming, amazingly, that Obama “authorized” Flynn’s chat with the Russian ambassador. But Wall Street didn’t appear to buy that line, considering the Dow dropped 300 points before recovering most of its losses to end the day down 40 points at 24,231. Likely helping the recovery was the news that U.S. corporations are about to get a big, yuge tax cut.

The head of UBS has lashed out against regulators’ efforts to rein in bankers’ pay, arguing that the push is fueled by envy among less well paid officials and risked stoking the populist backlash against capitalism. Sergio Ermotti, chief executive of the Swiss bank, also complained that banking had been singled out for criticism over compensation in a way that other sectors, such as private equity and tech, had not. “I think this discussion is made by people who are maybe frustrated that they do not make that kind of level of money,” the UBS boss said at the Financial Times annual banking summit on Thursday. Mr Ermotti’s comments come amid renewed anti-Wall Street sentiment on both sides of the Atlantic where even mainstream politicians have taken aim at a sector that has returned to strong profitability as wages for average workers continue to stagnate.

Ermotti then warned that lowering pay would cause investment bankers, who went into their line of work in order to change the world, to leave the industry. “People made a choice to do good for society while also getting their desired level of compensation,” he said. “They are going to do something else.”